Wednesday, July 31, 2013

I am bullish of equities globally, and have made that quite clear since June 25th. I don't recommend individual stocks and never shall, so I always effect positions via futures and/or ETFs. That said, I turned bullish of equities last month, buying the US S&P and Japan's NIkkei. Today I'm a bit less enthusiastic, but after all we've rallied for 14 of the past 15 days... perhaps a bit of consolidation is reasonable.

Tuesday, July 30, 2013

I own gold for my own account, but I am not... REPEAT NOT!!!... a gold bug; I'll be bullish of gold so long as the trend remains upward and the fundamentals warrant participation. At the moment, gold seem un-loved with few net spec positions and a rather surprising small hedge/professional short position by historical standards, so it seems right to be long of gold; but again, I'm not a "Bug." and I clearly don't view gold "religiously" as the Bugs seem always to do.

Monday, July 15, 2013

It's hard to be bullish on corn, particularly given the size of the crop we're almost certainly going to have. Yes, the crop went in the ground very late. Yes, that can mean a reduction yield. And yes, if an early frost were to occur, that may mean problems at the back end of the crop year.

But if those don't occur, given the fact that rain does make grain; given the fact that the crop finally did get into the ground in reasonable order; and given the very good growing conditions that have occurred in the past several weeks, you're going to have a huge corn crop. And we will not be able to use it.

The carryover next year is going to be egregiously high. I'm hard-pressed to think that that means anything other than lower prices. Moreover, the charts don't look bullish. The charts certainly look bearish.

Thursday, July 11, 2013

The only thing that will help natural gas is hot weather through the summertime. The problem with natural gas is that we are finding so much more, every single day through fracking processes – even more than we are finding crude oil. The supply is just huge. And it's going to get larger and larger over time. It's going to be very difficult for natural gas to get above $4 per mmbtu [million British Thermal Units]. If it does, it will only be fleeting in nature, as it will quickly be hedged away. I'm rather openly bearish of the natural gas market at this point.

Monday, July 8, 2013

Understanding the technicals of a market is terribly important. Understanding the fundamentals of a market is terribly important. When you can find a market that you understand technically and you understand fundamentally – and both the technicals and the fundamentals are pointing in the same direction – you're probably going to succeed.

As for "the box," it's something I've always looked at; it delineates the 50 to 62% retracement of the previous rally, or the 50 to 62% retracement of the previous big decline. If you think gold started on its upward climb from $275 an ounce 12 years ago, and got to close to $1920 an ounce, 50% back merely takes you to about $1100. A 62% correction could take you all the way to $900. That's a long ways away.

Wednesday, July 3, 2013

The rise in what is now referred to as Shibor – the Shanghai Interbank Offered Rate – is a shot across the bow by the People's Bank of China and by the new administration in China to say to real estate developers, real estate speculators, even stock market speculators, "Hey, we're not always going to be here to bail you out." Historically, the People's Bank of China has always allowed interest rates to rise in the day or two before any major holiday. It's not unusual for this to occur.

What is unusual is that the bank didn't come in after the holiday to re-liquefy the system. I think this was a brilliant move on the Bank of China's part to tell the markets, "Look, we're not going to be here to backstop you. You probably have got yourself overextended. Better get your house in order." It got everybody's attention. And my guess is that those who are a bit overextended are going to do what they can to become underextended.

Tuesday, July 2, 2013

The economy absolutely can continue to grow with somewhat tighter monetary conditions. In fact, I think the economy can grow a lot better without the Fed's help. The Fed's help back in 2008 was to be lauded; it was fantastic. They did exactly the right thing. In 2009 and '10, the first rounds of QE were probably still to be lauded. They probably did the right thing; however, they overstayed their welcome. They've created a bit of confusion. And confusion breeds contempt, as I like to say.

The Fed understands it has to get itself out of the box that it has put itself in. The way to do that is slowly, over time. I find it amusing that people are already responding as if the Fed has already begun to tighten. We have to remember, the Fed is going to continuously add reserves to the system until middle of 2014. It will just be that they are adding at a lesser pace. It's not as if they have taken anything out of the system. I think the markets have overreacted.

Monday, July 1, 2013

I like stocks a lot. I'm very impressed by the fact that the stock market found a low I think the other day I hope. The GDP numbers were very frightening and the stocks went higher. Markets that don't go down on bearish news want to go up.

Fed governor Dudley made it quite clear the Fed is going to be there for quite some time in the future, adding reserves to the future. That probably means higher share prices.

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